Monday, May 14, 2012

Questions NBC's David Gregory Didn't Ask JPMorgan' s CEO

NBC TV Meet the Press moderator David Gregory's interview with JPMorgan Chase chief Jamie Dimon  was little more than a video news release.

A few questions that should have been asked following the bank's disclosure of a $2 billion loss on derivative bets:
  • What is JPMorgan Chase's total derivatives exposure? Is it really $70 trillion dollars--roughly the size of the world's economy?
  • What is the total, combined derivatives exposure of all banks and hedge funds? Estimates of the notional value of all derivatives contracts in the world range from a mind boggling $600 trillion to an unfathomable $1.5 quadrillion, more than 20 times global GDP. What's the relationship between notional value and cash value? 
  • Don't the giant derivatives portfolios held by financial institutions--which even include bets on weather--constitute a threat to the entire global financial system?
  • How would a breakup of the euro affect foreign exchange derivatives? Could a euro breakup cause a financial meltdown?